Shop-Til-You-Drop Inc. recently reported net income of $5.2 million and depreciation of $600,000. What is was net cash flow? Assume it has no amortization expense.
To calculate the net cash flow, we need to take into account various factors. Net cash flow is a measure of the actual cash generated or utilized by a company in a given period. It considers not only the net income but also other non-cash items such as depreciation.
To determine the net cash flow in this case, we need to subtract the depreciation expense from the net income. Depreciation is a non-cash expense and does not impact the cash flow directly.
Net Cash Flow = Net Income - Depreciation
In this specific scenario:
Net Income = $5.2 million
Depreciation = $600,000
Substituting these values into the formula:
Net Cash Flow = $5.2 million - $600,000
Net Cash Flow = $4.6 million
Therefore, the net cash flow for Shop-Til-You-Drop Inc. is $4.6 million.
To determine the net cash flow, we need to calculate the operating cash flow. Operating cash flow can be calculated using the formula:
Operating Cash Flow = Net Income + Depreciation
Given:
Net Income = $5.2 million
Depreciation = $600,000
Plugging in the values:
Operating Cash Flow = $5.2 million + $600,000
Operating Cash Flow = $5.8 million
Therefore, the net cash flow for Shop-Til-You-Drop Inc. is $5.8 million.